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Dollar shrugs off weak Chinese trade data

The Australian dollar held near one-month highs against the euro on Monday as political uncertainty in Italy weighed on the common currency.

The dollar was steady against the US dollar, undeterred by China's weaker-than-expected trade figures as investors focussed on Beijing's strong weekend data which provided further signs of economic recovery.

The Aussie rose as high as 81.48 euro cents in early trading, its highest since November 20, before dropping back to 81.20 in late trade.

The euro came under broad pressure after Italian Prime Minister Mario Monti on Saturday said he intended to resign early, creating uncertainty over who will succeed.

Against the US dollar, the Aussie fetched $US1.0475, versus $US1.0484 in New York on Friday, and remained within striking distance of an 11-week peak of $US1.0515 set last week.

It dipped slightly after China's November trade numbers came in well below market expectations, with exports rising an anaemic 2.9 per cent and imports flat year-on-year.

"The data over the weekend was solid and that was a countervailing force helping support the Aussie," said Greg Gibbs, a strategist at Royal Bank of Scotland in Singapore.

Indeed, figures out on Sunday showed growth in China's factory output and retail sales jumped to eight-month highs in November, fuelling hopes that the economy was snapping out of a protracted slump.

Also underpinning the Aussie was an 8 per cent surge in the January to November period in China's imports of iron ore, Australia's biggest exports earner, as well as record long speculative positions in the Aussie.

Net total of Aussie long positions soared to $US92.2 billion last week, from $US76.8 billion the week before, even as the Australian central bank cut rates to a matching record-low of 3 per cent.